Correlation Between Performance Food and Metro AG
Can any of the company-specific risk be diversified away by investing in both Performance Food and Metro AG at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Performance Food and Metro AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Performance Food Group and Metro AG, you can compare the effects of market volatilities on Performance Food and Metro AG and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Performance Food with a short position of Metro AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and Metro AG.
Diversification Opportunities for Performance Food and Metro AG
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Performance and Metro is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG and Performance Food is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Performance Food Group are associated (or correlated) with Metro AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro AG has no effect on the direction of Performance Food i.e., Performance Food and Metro AG go up and down completely randomly.
Pair Corralation between Performance Food and Metro AG
Assuming the 90 days horizon Performance Food Group is expected to generate 0.71 times more return on investment than Metro AG. However, Performance Food Group is 1.4 times less risky than Metro AG. It trades about 0.18 of its potential returns per unit of risk. Metro AG is currently generating about -0.17 per unit of risk. If you would invest 7,850 in Performance Food Group on September 19, 2024 and sell it today you would earn a total of 400.00 from holding Performance Food Group or generate 5.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Performance Food Group vs. Metro AG
Performance |
| Timeline |
| Performance Food |
| Metro AG |
Performance Food and Metro AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Performance Food and Metro AG
The main advantage of trading using opposite Performance Food and Metro AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food position performs unexpectedly, Metro AG can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Metro AG will offset losses from the drop in Metro AG's long position.| Performance Food vs. AGF Management Limited | Performance Food vs. Meiko Electronics Co | Performance Food vs. Sims Metal Management | Performance Food vs. Corporate Travel Management |
| Metro AG vs. Metro AG | Metro AG vs. Superior Plus Corp | Metro AG vs. SIVERS SEMICONDUCTORS AB | Metro AG vs. NorAm Drilling AS |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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